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1 – 2 of 2Sebastian Schneck and Julia Hautz
This study aims to explain the cognitive bias of overconfidence and portray the different ways in which overconfident top managers may affect firm outcomes. This paper outlines…
Abstract
Purpose
This study aims to explain the cognitive bias of overconfidence and portray the different ways in which overconfident top managers may affect firm outcomes. This paper outlines their opportunities and risks and how these managers are surrounded by contextual factors.
Design/methodology/approach
This study draws on a systematic overview of the current literature on senior executives' overconfidence and empirical studies investigating its impact on strategic outcomes.
Findings
This study identifies the opportunities and risks of overconfident top managers in firms and considers the contextual factors that influence firm outcomes. The results provide three important managerial implications for interactions with overly confident top managers.
Practical implications
These findings help us understand top managers' overconfidence. Organizations receive guidance on how to constrain inappropriately confident top managers who are detrimental to their businesses.
Originality/value
This study contributes to a better understanding of overconfidence among top managers, illustrates associated opportunities and risks and provides recommendations for controlling and dealing with top managers characterized by this cognitive bias.
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Keywords
Anthony Smythe, Igor Martins and Martin Andersson
With the recognition that generating economic growth is not the same as sustaining it, the challenge to catch-up and growth literature is discerning between these processes…
Abstract
Purpose
With the recognition that generating economic growth is not the same as sustaining it, the challenge to catch-up and growth literature is discerning between these processes. Recent research suggests that the decline in the frequency of “shrinking” episodes is more important for long-term development than higher growth rates. By using a framework centred around social capabilities, this study aims to investigate the effects of income inequality and poverty on economic shrinking frequency, as opposed to previous literature that has exclusively had a growth focus. The aim is to investigate how and why some societies might be more resilient to economic shrinking.
Design/methodology/approach
The research is a quantitative study, and the authors build a longitudinal data set including 23 developing countries throughout 42 years to test the paper’s purpose. This study uses country and period fixed-effects specifications as well as cross-sectional graphical representations to investigate the relationship between proxies of economic inclusivity and the frequency of shrinking episodes.
Findings
The authors demonstrate that while inclusive societies are more resilient to shrinking overall, it is changes in poverty levels, but not changes in income inequality, that appear to be correlated with economic shrinking frequency. Inequality, while still an important element to explain countries’ growth potential as an initial condition, does not seem to make the sample more resilient to shrinking. The authors conclude that the mechanisms in which poverty and inequality are correlated with the catch-up process must run through different channels. Ultimately, processes that explain growth may intersect but not always overlap with the ones that explain resilience to shrinking.
Originality/value
The need for inclusive growth in long-term development has been championed for decades, yet inclusion has seldom been explored from the shrinking perspective. Though poverty reduction is already an important mainstream political objective, this paper differentiates itself by providing an alternate viewpoint of why this is important. Income inequality could have more of an economic growth limiting effect, while poverty reduction could be required to build resilience to economic shrinking. Developing countries will need both growth and resilience to shrinking, to catch-up with higher-income economies, which policymakers might need to balance carefully.
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